Banque Nationale de Paris on Tuesday unveiled an audacious $38 billion hostile bid for French banking rivals Paribas and Societe Generale. BNP said Wednesday it would be willing to go it alone with Paribas if need be.
The bank, which unveiled further details of its takeover plans on Wednesday, may be attempting to put the screws in Paribas, which is already engrossed in $15 billion merger talks with Societe Generale, announced last month.
Analysts have suggested that Societe Generale and Paribas, which have yet to vote on the deal, will almost certainly reject the offer. They have already hired investment banks to help do just that. Indeed, some analysts suggest that SocGen and Paribas might even consider a counter-attack bid.
"We think that BNP feels exposed and wants to spoil the link between SG and Paribas. This [move] puts BNP in play," said Hugh Pye, banking analyst with Fleming Securities in London. "I'm not sure BNP's offer is that appealing. They're offering shares not cash so there's no upside," he added.
The new bank, if BNP's bid does succeed, would be called SBP and would be the world's biggest bank by asset size, with $1 trillion in assets. That would steal the mantle from Deutsche Bank, which is buying Bankers Trust. That combination would create a bank which would have $800 billion in assets.
BNP has proposed exchanging 11 BNP shares for 8 Paribas shares, which would be a premium of 18.3 percent over Paribas' closing price on Tuesday. It's also offering 15 of its shares for seven Societe Generale shares, which would represent a premium of 14 percent.
The merger would generate some $558 million in savings in 2001. BNP said 90 percent of the "synergies" would come from cost cutting, with 40 percent being carved from the information technology area. The bank said it will save another $400 million each year after 2004.
The main business units will include retail banking, specialized financial services, private banking and asset management, and corporate and investment banking. All told, the merged banks would have 4,7000 branches and 5,100 ATMs and over 11 million retail customers in France.
It would also claim an 18 percent penetration for retail clients and over 25 percent market share in desposits and 16 percent tin lending. Outside France, SPB's customer base would total 2.5 million customers in the U.S. through BancWest, in Central Europe, in the Mediterranean basin, in Africa and in the Indian Ocean.
Written By Suzanne Miller, CBS MarketWatch